AMF - Results from the Public Consultation on the Provision of Future Performance Simulations to Investors - Publication of a Draft Recommendation on the Performance Simulations Offered to Investors

The Autorité des Marchés Financiers (the “AMF”, the French financial markets authority) published on 4 April 2017 its feedback on the public consultation launched in November 2016 on the provision of future performance simulations to retail investors in the context of marketing investment solutions before receiving investment advice or services. Pursuant to this consultation, the AMF observed the emergence of wholly digital services providing savings solutions. Professional offerings those services use standardised online questionnaires in which clients are required to fill in information (such as their initial investment amount, the amount of their monthly investment, their risk profile and the investment value they would like to obtain to a given horizon) to compensate with the impossibility of establishing personal contact with clients. Such questionnaires generate, via algorithms, projections for the client’s investment value under various scenarios. The AMF further noted that these future performance simulation tools may be based on unrealistic hypotheses and may therefore provide misleading and potentially over-optimistic information.

As a result, the AMF has decided to amend its General Regulations (“GRAMF”) and published a draft Reccomandation, which (i) recommends best practices for the design of future performance simulations and (ii) provides a standardised message warning investors about future performances simulations.

Read the AMF Outcome of the public consultation on the provision of future performance simulations to investors (in English only)

Read the AMF news release (in English only)

Read the AMF draft recommendation (in French only)

Publication of an Ordinance Creating the New French Pension Fund

Pursuant to the Sapin Law 2 dated 9 December 2016, an ordinance was adopted on 6 April 2017 to create a new investment vehicle presented as the “French pension plan”, the “fonds de retraite professionelle supplémentaire” (“FRPS”). The legal regime, which still needs to be clarified by decree, mainly provides that:

• the FRPS must obtain the agreement of the Autorité de Contrôle Prudentiel et de Résolution (the « ACPR », the French authority for credit institutions and insurance companies);

• the FRPS could receive contracts concluded to provide retirement benefits in the context of an occupational activity and paid to supplement benefits provided by the mandatory regimes;

• the corporate form to be used by the FRPS is either a limited company (société anonyme) or a mutual insurance company (société d’assurance mutuelle);

• the FRPS are not subject to Solvency II; and

• the FRPS must comply with some financial, governance, transparency and prudential rules that require in particular to maintain a necessary solvency margin.

Read the Ordinance (in French only)

AFG - Publication of a Public Position on RTS PRIIPs

The Association Française de la Gestion Financière (the “AFG”, the French professional association of asset managers) published on 18 April, jointly with the French Federation of the Insurance (“FFA”), a public position on the implementation of article 14.2 of the new Delegated Regulation supplementing PRIIPs (The Packaged Retail and Insurance-based Investment Products) Regulation, setting out the RTS (“regulatory technical standards”).

To ensure the operational implementation of PRIIPs, the AFG and the FFA have decided to clarify their common position on the aforesaid article 14.2. By way of derogation of article 14.1 related to the specific information on each underlying investment option (including Multiple Investment Options (MOPs)), PRIIP manufacturers are authorised to use the UCITS KIID (key investor information document) for the funds until 31 December 2019, including if MOPs are exclusively invested in unit-linked products or MOPs are hybrid products (such as unit-linked life insurance contracts).

As a result, the AFG and the FFA recommend the stakeholders to provide the UCITS KIID and to include the additional information related to the use of MOPs until the end of the transitional period on 31 December 2019, in accordance with article 14.2 of the PRIIPs regulatory technical standards Regulation.